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Everybody Wants Facebook Stock, Goldman Sachs Cries, "No More!"

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    NEWSLETTERS

    Andrew Feinberg

    Once Facebook's $50 billion valuation came out, Goldman Sachs was hit with tsunami of requests for private Facebook shares. Now the company reportedly can't keep up with demand and has notified investors their orders would be much smaller than anticipated.

    Wealthy Goldman clients have been jockeying for a piece of Facebook since the deal was struck last weekend . . .The Wall Street bank mostly is approaching individual Goldman clients, though an unknown number of hedge funds, private-equity firms and other institutions that make trades or do other business with Goldman also have been asked if they would be interested in buying a piece of Facebook, according to people who have been contacted by Goldman. 

    Goldman Sachs declined to comment, but WSJ called out Blackstone Group LP and Fortress Investment Group LLC as two of the firms contacted.The investment banker's deal included an investment of $2 million and a promise not to sell any Facebook shares until 2013. 

    Goldman Sachs stands to make a lot of money on the deal -- an upfront 4 percent fee and 5 percent from any gains on the trade, as well as money for setting up the deal in the first place.

    You can't blame people for wanting a "sure thing" such as an investment in Facebook, but as one person pointed out, Facebook is now trading in secondary markets "25 or 50 times" higher than its sales. To those in the know, that means it's likely an inflated valuation and not at all a sure thing.